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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Best Buy Co. Inc., economic profit calculation

US$ in millions

12 months ended:	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018	Jan 28, 2017
Net operating profit after taxes (NOPAT)¹	2,817)	2,197)	1,799)	1,580)	1,296)	1,602)
Cost of capital²	15.42%	15.80%	14.17%	15.23%	15.16%	14.66%
Invested capital³	7,721)	9,079)	7,649)	7,210)	5,407)	6,613)

Economic profit⁴	1,627)	763)	715)	482)	476)	632)

Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,817 – 15.42% × 7,721 = 1,627

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Best Buy Co. Inc. economic profit increased from 2020 to 2021 and from 2021 to 2022.

Best Buy Co. Inc., NOPAT calculation

US$ in millions

12 months ended:	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018	Jan 28, 2017
Net earnings	2,454)	1,798)	1,541)	1,464)	1,000)	1,228)
Deferred income tax expense (benefit)¹	14)	(36)	70)	10)	162)	201)
Increase (decrease) in allowances for uncollectible receivables²	1)	14)	1)	(14)	(15)	3)
Increase (decrease) in deferred revenue³	392)	210)	55)	(7)	35)	61)
Increase (decrease) in restructuring accrual⁴	(117)	108)	8)	(15)	(11)	(32)
Increase (decrease) in equity equivalents⁵	290)	296)	134)	(26)	171)	233)
Interest expense	25)	52)	64)	73)	75)	72)
Interest expense, operating lease liability⁶	68)	78)	92)	107)	115)	177)
Adjusted interest expense	93)	130)	156)	180)	190)	249)
Tax benefit of interest expense⁷	(19)	(27)	(33)	(38)	(64)	(87)
Adjusted interest expense, after taxes⁸	73)	103)	124)	142)	126)	162)
(Income) loss from discontinued operations, net of tax⁹	—)	—)	—)	—)	(1)	(21)
Net operating profit after taxes (NOPAT)	2,817)	2,197)	1,799)	1,580)	1,296)	1,602)

Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowances for uncollectible receivables.

³ Addition of increase (decrease) in deferred revenue.

⁴ Addition of increase (decrease) in restructuring accrual.

⁵ Addition of increase (decrease) in equity equivalents to net earnings.

⁶ 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 2,709 × 2.50% = 68

⁷ 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 93 × 21.00% = 19

⁸ Addition of after taxes interest expense to net earnings.

⁹ Elimination of discontinued operations.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Best Buy Co. Inc. NOPAT increased from 2020 to 2021 and from 2021 to 2022.

Best Buy Co. Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018	Jan 28, 2017
Income tax expense	574)	579)	452)	424)	818)	609)
Less: Deferred income tax expense (benefit)	14)	(36)	70)	10)	162)	201)
Add: Tax savings from interest expense	19)	27)	33)	38)	64)	87)
Cash operating taxes	579)	642)	415)	452)	720)	495)

Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Best Buy Co. Inc. cash operating taxes increased from 2020 to 2021 but then slightly decreased from 2021 to 2022.

Best Buy Co. Inc., invested capital calculation (financing approach)

US$ in millions

	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018	Jan 28, 2017
Short-term debt	—)	110)	—)	—)	—)	—)
Current portion of long-term debt	13)	14)	14)	56)	544)	44)
Long-term debt, excluding current portion	1,216)	1,253)	1,257)	1,332)	811)	1,321)
Operating lease liability¹	2,709)	2,705)	2,798)	2,615)	2,695)	2,575)
Total reported debt & leases	3,938)	4,082)	4,069)	4,003)	4,050)	3,940)
Total Best Buy Co., Inc. shareholders’ equity	3,020)	4,587)	3,479)	3,306)	3,612)	4,709)
Net deferred tax (assets) liabilities²	(3)	(17)	20)	(55)	(159)	(317)
Allowances for uncollectible receivables³	39)	38)	24)	23)	37)	52)
Deferred revenue⁴	1,103)	711)	501)	446)	453)	418)
Restructuring accrual⁵	7)	124)	16)	8)	23)	34)
Equity equivalents⁶	1,146)	856)	561)	422)	354)	187)
Accumulated other comprehensive (income) loss, net of tax⁷	(329)	(328)	(295)	(294)	(314)	(279)
Adjusted total Best Buy Co., Inc. shareholders’ equity	3,837)	5,115)	3,745)	3,434)	3,652)	4,617)
Marketable securities⁸	(54)	(118)	(165)	(227)	(2,295)	(1,944)
Invested capital	7,721)	9,079)	7,649)	7,210)	5,407)	6,613)

Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of deferred revenue.

⁵ Addition of restructuring accrual.

⁶ Addition of equity equivalents to total Best Buy Co., Inc. shareholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of marketable securities.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Best Buy Co. Inc. invested capital increased from 2020 to 2021 but then slightly decreased from 2021 to 2022 not reaching 2020 level.

Best Buy Co. Inc., cost of capital calculations

Jan 29, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	22,937)	22,937)	÷	26,891)	=	0.85	0.85	×	17.71%	=	15.11%
Total debt³	1,245)	1,245)	÷	26,891)	=	0.05	0.05	×	3.02% × (1 – 21.00%)	=	0.11%
Operating lease liability⁴	2,709)	2,709)	÷	26,891)	=	0.10	0.10	×	2.50% × (1 – 21.00%)	=	0.20%
Total:	26,891)					1.00					15.42%

Based on: 10-K (reporting date: 2022-01-29).

¹ US$ in millions

² Equity. See details »

³ Total debt. See details »

⁴ Operating lease liability. See details »

Jan 30, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	29,553)	29,553)	÷	33,737)	=	0.88	0.88	×	17.71%	=	15.52%
Total debt³	1,479)	1,479)	÷	33,737)	=	0.04	0.04	×	2.79% × (1 – 21.00%)	=	0.10%
Operating lease liability⁴	2,705)	2,705)	÷	33,737)	=	0.08	0.08	×	2.90% × (1 – 21.00%)	=	0.18%
Total:	33,737)					1.00					15.80%

Based on: 10-K (reporting date: 2021-01-30).

¹ US$ in millions

² Equity. See details »

³ Total debt. See details »

⁴ Operating lease liability. See details »

Feb 1, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	13,026)	13,026)	÷	17,184)	=	0.76	0.76	×	17.71%	=	13.43%
Total debt³	1,360)	1,360)	÷	17,184)	=	0.08	0.08	×	5.02% × (1 – 21.00%)	=	0.31%
Operating lease liability⁴	2,798)	2,798)	÷	17,184)	=	0.16	0.16	×	3.30% × (1 – 21.00%)	=	0.42%
Total:	17,184)					1.00					14.17%

Based on: 10-K (reporting date: 2020-02-01).

¹ US$ in millions

² Equity. See details »

³ Total debt. See details »

⁴ Operating lease liability. See details »

Feb 2, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	19,041)	19,041)	÷	23,054)	=	0.83	0.83	×	17.71%	=	14.63%
Total debt³	1,398)	1,398)	÷	23,054)	=	0.06	0.06	×	4.89% × (1 – 21.00%)	=	0.23%
Operating lease liability⁴	2,615)	2,615)	÷	23,054)	=	0.11	0.11	×	4.10% × (1 – 21.00%)	=	0.37%
Total:	23,054)					1.00					15.23%

Based on: 10-K (reporting date: 2019-02-02).

¹ US$ in millions

² Equity. See details »

³ Total debt. See details »

⁴ Operating lease liability. See details »

Feb 3, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	19,485)	19,485)	÷	23,592)	=	0.83	0.83	×	17.71%	=	14.63%
Total debt³	1,412)	1,412)	÷	23,592)	=	0.06	0.06	×	5.12% × (1 – 33.70%)	=	0.20%
Operating lease liability⁴	2,695)	2,695)	÷	23,592)	=	0.11	0.11	×	4.26% × (1 – 33.70%)	=	0.32%
Total:	23,592)					1.00					15.16%

Based on: 10-K (reporting date: 2018-02-03).

¹ US$ in millions

² Equity. See details »

³ Total debt. See details »

⁴ Operating lease liability. See details »

Jan 28, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	13,864)	13,864)	÷	17,886)	=	0.78	0.78	×	17.71%	=	13.73%
Total debt³	1,447)	1,447)	÷	17,886)	=	0.08	0.08	×	5.53% × (1 – 35.00%)	=	0.29%
Operating lease liability⁴	2,575)	2,575)	÷	17,886)	=	0.14	0.14	×	6.88% × (1 – 35.00%)	=	0.64%
Total:	17,886)					1.00					14.66%

Based on: 10-K (reporting date: 2017-01-28).

¹ US$ in millions

² Equity. See details »

³ Total debt. See details »

⁴ Operating lease liability. See details »

Best Buy Co. Inc., economic spread ratio calculation, comparison to benchmarks

	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018	Jan 28, 2017
Selected Financial Data (US$ in millions)
Economic profit¹	1,627)	763)	715)	482)	476)	632)
Invested capital²	7,721)	9,079)	7,649)	7,210)	5,407)	6,613)
Performance Ratio
Economic spread ratio³	21.07%	8.40%	9.35%	6.69%	8.81%	9.56%
Benchmarks
Economic Spread Ratio, Competitors⁴
Amazon.com Inc.	-15.34%	4.75%	2.11%	-1.23%	—	—
Home Depot Inc.	25.62%	16.44%	23.52%	23.96%	—	—
Lowe’s Cos. Inc.	24.88%	12.37%	8.44%	-1.04%	—	—
TJX Cos. Inc.	7.49%	-9.44%	8.27%	7.54%	—	—

Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 1,627 ÷ 7,721 = 21.07%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Best Buy Co. Inc. economic spread ratio deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level.

Best Buy Co. Inc., economic profit margin calculation, comparison to benchmarks

	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018	Jan 28, 2017
Selected Financial Data (US$ in millions)
Economic profit¹	1,627)	763)	715)	482)	476)	632)

Revenue	51,761)	47,262)	43,638)	42,879)	42,151)	39,403)
Add: Increase (decrease) in deferred revenue	392)	210)	55)	(7)	35)	61)
Adjusted revenue	52,153)	47,472)	43,693)	42,872)	42,186)	39,464)
Performance Ratio
Economic profit margin²	3.12%	1.61%	1.64%	1.12%	1.13%	1.60%
Benchmarks
Economic Profit Margin, Competitors³
Amazon.com Inc.	-8.01%	2.04%	0.82%	-0.56%	—	—
Home Depot Inc.	8.14%	6.18%	7.80%	7.57%	—	—
Lowe’s Cos. Inc.	6.77%	3.92%	3.13%	-0.36%	—	—
TJX Cos. Inc.	3.04%	-6.57%	3.71%	3.37%	—	—

Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).

¹ Economic profit. See details »

² 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × 1,627 ÷ 52,153 = 3.12%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Best Buy Co. Inc. economic profit margin deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level.

Best Buy Co. Inc. (NYSE:BBY)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin